The Financial Conduct Authority is concerned that customers are being overcharged by investment platforms in the United Kingdom, as per a letter it wrote to 42 firms in total on Tuesday.
Investment firms found involved in double-dipping
FCA is not comfortable with the amount of interest the majority of these companies are earning on cash balances.
Many, the letter added, were also found involved in “double-dipping” – a practice of charging fees for holding cash.
The watchdog has ordered these investment platforms to quit participating in such practices by February 29th. Otherwise, it will “intervene” to ensure “fair value”, said Sheldon Mills – an executive director of the Financial Conduct Authority.
Shares of AJ Bell PLC (LON: AJB) are taking a material hit following the FCA letter on Tuesday.
Hargreaves Lansdown (LON:HRGV) responds to the FCA letter
Note that a representative for AJ Bell is yet to comment on the concerns the regulator raised today.
Other names that are weighed this morning include Hargreaves Lansdown PLC (LON: HL) even though it has already reiterated that it does not participate in double-dipping.
The London-listed also confirmed in a statement on Tuesday that it will “continue to work with the regulator to further review our practices”.
Still, analysts at Jefferies expect the development to negatively affect margins at both AJ Bell and Hargreaves Lansdown that recently reported about £184 million in total revenue for the third quarter of 2023. Its shares are currently down about 25% versus their year-to-date high in mid-February.
This article first appeared on Invezz.com
